Dismissal often comes unexpectedly and can be extremely stressful. In such moments, an action for unfair dismissal often seems the only way to secure your livelihood and enforce your rights. But before you take this legal step, it is crucial to know exactly what costs will be incurred. This article is intended to help you decide whether and how you want to take this legal route. The following article will therefore take a detailed look at the various costs of an action for unfair dismissal, including court costs, lawyers’ fees and possible hidden expenses and how they arise. It will also present various options for financial support.
In which cases is an action for unfair dismissal even an option?
An action for unfair dismissal is a court proceeding in which an employee seeks a review of the validity of their dismissal with due observance of the notice periods. It may be considered if the employee assumes that their dismissal was invalid. Reasons for this may include insufficient grounds for dismissal, failure to comply with notice periods or formal errors. The action must be filed with the labour court within three weeks of receipt of the notice of termination.
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Costs of an action for unfair dismissal: What costs will the employee incur?
The costs of an action for unfair dismissal can be divided into court costs and lawyer’s fees.
1. Court costs
Court costs are only incurred if a judgment is handed down. If, on the other hand, a settlement is reached, the court costs are waived. A settlement before the labour court is an agreement between the employer and employee that ends a dispute through mutual concession. Both parties agree to certain conditions, such as the acceptance of the termination and the payment of compensation to the employee. In this way, the conflict is resolved without a court ruling. In practice, settlements are often reached, which usually means that no court costs are incurred.
If a judgement is nevertheless passed, the court costs are based on the amount in dispute. This usually corresponds to three gross monthly salaries. For example, with three monthly salaries of €3,000 each, the total amount in dispute is €9,000. The Court Fees Act regulates the fees on the basis of a fixed schedule. The following table shows the court costs based on the amount in dispute:
| Amount in dispute up to… | Fee |
| 500 € | 76 € |
| 1.000 € | 116 € |
| 1.500 € | 156 € |
| 2.000 € | 196 € |
| 3.000 € | 238 € |
| 4.000 € | 280 € |
| 5.000 € | 322 € |
| 6.000 € | 364 € |
| 7.000 € | 406 € |
| 8.000 € | 448 € |
| 9.000 € | 490 € |
| 10.000 € | 532 € |
| 13.000 € | 590 € |
Court costs are borne by the unsuccessful party. Furthermore, costs increase if the case goes from the first instance to the appeal or even to the further appeal. If the action not only concerns the termination, but also other matters in dispute, the amount in dispute increases accordingly. This in turn leads to higher court costs. In addition, costs may arise for witnesses or experts.
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2. Lawyer’s fees
Then there are the legal fees. There is no obligation to be represented by a lawyer in the court of first instance, i.e. the labour court. Nevertheless, it is often advisable to be represented by a lawyer. Lawyers can either charge statutory fees in accordance with the German Lawyers’ Fees Act (RVG) or agree an hourly rate. The fees under the RVG also depend on the amount in dispute. In labour court proceedings at the first instance, each party bears their own legal fees, regardless of the outcome of the proceedings. This only changes from the second instance (regional labour court). The lawyer’s fee includes the procedural fee, the appointment fee and, in the event of a settlement, an agreement fee. The costs for initiating and conducting the proceedings (procedural fee) and for representing the client in and out of court (appointment fee) can be seen in the following table, depending on the amount in dispute:
| Amount in dispute up to… | Fee |
| 500 € | 122,50 € |
| 1.000 € | 220 € |
| 1.500 € | 317,50 € |
| 2.000 € | 415 € |
| 3.000 € | 555 € |
| 4.000 € | 695 € |
| 5.000 € | 835 € |
| 6.000 € | 975 € |
| 7.000 € | 1.115 € |
| 8.000 € | 1.255 € |
| 9.000 € | 1.395 € |
| 10.000 € | 1.535 € |
| 13.000 € | 1.665 € |
In the event of a settlement, the lawyer’s fees increase due to the settlement fee, but the court costs are waived. The following table shows the lawyer’s fees increased by the settlement fee according to the amount in dispute:
| Amount in dispute up to… | Fee |
| 500 € | 171,50 € |
| 1.000 € | 308 € |
| 1.500 € | 444,50 € |
| 2.000 € | 581 € |
| 3.000 € | 777 € |
| 4.000 € | 973 € |
| 5.000 € | 1.169 € |
| 6.000 € | 1.365 € |
| 7.000 € | 1.561 € |
| 8.000 € | 1.757 € |
| 9.000 € | 1.953 € |
| 10.000 € | 2.149 € |
| 13.000 € | 2.331 € |
In addition, the lawyer may charge a maximum of €20 as a flat-rate expense allowance under the RVG.
Case studies on the costs of an action for unfair dismissal
The following example is intended to illustrate the whole situation: You are an employee and earn €2,000 gross per month. This means that the amount in dispute for you is €6,000 (three times your gross monthly salary).
1. Case constellation without settlement
If no settlement is reached and the labour court therefore has to hand down a judgment, court costs (Table 1) and legal fees (Table 2) will be incurred. This means that €364 is due to the court and €975 to the lawyer. In addition, the lawyer can charge you €20 as a flat-rate expense allowance. This results in a total of €995 for the lawyer, to which €189.05 VAT is added. The total costs therefore amount to €1,548.05.
2 case scenario with a settlement
If, on the other hand, a settlement is reached, as is so often the case, the court costs are waived and the employee has to pay the lawyer’s fees, which are increased by the settlement fee. For a dispute value of €6,000, the lawyer’s fee is €1,365 (Table 3). Here, too, the lawyer can demand an additional €20 as a flat-rate expense allowance. The total amount comes to €1,385, plus €263.15 in VAT. This means that a total of €1,648.15 must be expected.
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Financial support: legal expenses insurance and legal aid
There are various forms of support to help alleviate the financial burden. These include, in particular, legal expenses insurance. Depending on the insurance contract, this covers the costs of a lawyer, court and possibly also experts and witnesses. In contrast, legal aid is a form of state support for people who cannot afford the costs of a legal dispute. This is dependent on income and assets, so that access to the legal system is also ensured for financially weaker people. Here, too, court and lawyer’s fees are covered upon application.
Conclusion: When is an action for unfair dismissal worthwhile?
An action for unfair dismissal can be indispensable for employees to take action against unjustified dismissals. The financial challenges of such a lawsuit should not be underestimated. The various costs – from court costs to attorney fees to additional expenses – can quickly add up. Therefore, if an employee is considering filing an action for unfair dismissal, it is essential that they carefully weigh up the risks in terms of the costs involved. A successful outcome can lead to reinstatement or compensation that justifies the costs incurred. In the event of reinstatement, the employee is also entitled to default wages. This is the salary that the employer must pay retroactively if the employer’s action for unfair dismissal was successful. Early advice from a lawyer is therefore essential to be able to better assess one’s own chances of success and thus the financial risk. Support options such as legal expenses insurance and legal aid can also help to reduce the financial burden.
Free initial consultation with a specialist lawyer
- Free initial consultation with a lawyer
- Quick callback after 1 to 2 hours
- Strategy for negotiating the severance pay
